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2017 3 Month
Financial Results
April 24, 2017
• Accelerated growth in domestic MDA market due to SCT cut
• Low single-digit growth in European MDA market at retail level
• Pressure from rising steel, plastic and large panel prices on profit margins
• Consolidation of higher margin Dawlance operations
• Improvement in opex-to-sales ratio stemming from increasing scale
• Seasonal rise in WC/Sales ratio due to increasing share of Turkey sales.
• Increasing net debt to finance working capital need
• Depreciation of TRY against hard currency and other EM currencies
2017 Q1 Summary
Net Sales
TRY 4.6 bln.
EBITDA
Margin
10.5%
Leverage
2.1X
WC / Sales
32%
2
Key Factors Impacting Revenues
2017 Q1 Sales Performance
* Based on January-February 2017 retail sales data
SCT Cut in TurkeySpike in both sell-in and sell-out sales after the removal of
SCT on white goods until the end of September.
POS Cash RegisterWeak demand as the deadline was extended until
the end of 2017
International
Growth*Slowing demand in Western Europe, continuation of decline in
South Africa, flat market in Russia.
Currency ImpactTRY’s depreciation against hard currencies (€, $, £) and some
emerging market currencies (PLN, ZAR, RUB)
Dawlance
ConsolidationConsolidation of Pakistan based Dawlance
3
Key Factors Impacting Margins
2017 Q1 Margin Performance
Raw Material CostCost increase in steel, plastic derivatives and large size
panels (49-55 inches)
Currency ImpactStrong USD against both hard currencies (€, £) and main
market currencies (PLN, ZAR, RUB, RON)
IncentivesLoss of income arising from the change in Turquality incentive
program
OPEX110bps improvement in opex-to-sales ratio as opex grew
slower than net sales
Dawlance
ConsolidationHigh margin Pakistani operations
Price Adjustments Price adjustments in major markets (Turkey, UK)
4
2017 Q1 Performance - Turkey
Market
• Substantial growth in MDA market, largely a pull-forward demand, boosted by SCT cut
• A relatively lower growth (9%) in A/C market
• Flat TV market* in 2M17 (-0,5%), where import brands’ market share slightly declined
Turkish Market by Product Type
(MDA 6)Turkish MDA6 Total Market
YoY Change
25%
42%
40%
-10%
0%
10%
20%
30%
40%
50%
Jan
Fe
b
Ma
r
Apr
Ma
y
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015 2016 2017
('000 Units) 1Q17 1Q16 YoY
Refrigerator 468 410 14%
Freezer 247 81 204%
Washing M. 608 472 29%
Dryer 37 27 35%
Dishwasher 486 371 31%
Oven 253 176 44%
Total 2,099 1,538 36%
• MDA and A/C figures are based on BESD data.
The data for TV is based on retail panel.
5
2017 Q1 Performance - Turkey
Arçelik A.Ş.
• Above market-average unit growth (+43% vs. 36%) in MDA-6 market
• ~9% growth in unit sales for A/C products, similar to the market
• Flat TV market share YoY around 25%*
• Weak POS cash register demand due to base effect and legal deadline extension;
however, continuing revenue contribution from service fee
23
%
62%
TV
Sales
40
%
Built-in
Sales
AC
Sales
Underperformers Outperformers
-84%
POS CR
Sales
46%
SDA
Sales
10
4%
Dryer
Sales
158%
Iron
Sales
6
* The data for TV is based
on retail panel.
Domestic Growh: +35%
2017 Q1 Performance - International
Market
• Strong growth in Italy and Spain mitigated by the declining UK and French markets
• Significant performance in Eastern Europe, except for Russia
• Increasing share of private labels in European market (esp. in FS segment)
• A dismal S. African market, down 7% YoY, in 2M17
Market Unit Growth in Major Markets (2M17) (%)
(MDA 6)
-7% -2% 3% 8% 13% 18%
S. Africa
Ukraine
Russia
Romania
Poland
E. Europe
UK
Spain
Italy
Germany
France
W. Europe
European Market Growth by Product Type
(2M17) (%)
2% 2%
3%
0%
-3%
1% 1%
0%
4%
Wa
shin
g M
.
Dry
er
Dis
hw
asher
Coo
ler
Fre
eze
r
Ove
n
TO
TA
L
Fre
e S
tandin
g
Built
-in
7
2017 Q1 Performance - International
Arçelik A.Ş.
• Arçelik Group continuing to strenghten its position in international markets
- Growth curve flattening for Beko in FS segment in European market
- Beko; among the the Top 3 Winners in terms of market share gain in built-in segment
- Decreasing TV sales due to focus on profitable sales
- Slow start to the year in Air-Conditioner business
15
%Grundig
MDA Sales
61
%
SDA
Sales
47%
Built-in
Sales
Beko Unit Market Share in Europe (%)
(MDA 6)
34%
TV Sales
-9%
AC
Sales
Underperformers Outperformers
0
2
4
6
8
10
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
Total Free-standing Built-in
8
International Growh: +29%
Trends in Parity and Raw Material Index
EUR/USD Development Raw Material Index * - Market Price
* Raw material price index for appliances category
40
50
60
70
80
90
100
110
Jan-1
4
Ma
r-14
Ma
y-1
4
Jul-1
4
Sep
-14
Nov-1
4
Jan-1
5
Ma
r-15
Ma
y-1
5
Jul-1
5
Sep
-15
Nov-1
5
Jan-1
6
Ma
r-16
Ma
y-1
6
Jul-1
6
Sep
-16
Nov-1
6
Jan-1
7
Ma
r-17
Annual Average RM Price Index (Market)
1.00
1.10
1.20
1.30
1.40
1.50
Jan-1
4
Ma
r-14
Ma
y-1
4
Jul-1
4
Sep
-14
Nov-1
4
Jan-1
5
Ma
r-15
Ma
y-1
5
Jul-1
5
Sep
-15
Nov-1
5
Jan-1
6
Ma
r-16
Ma
y-1
6
Jul-1
6
Sep
-16
Nov-1
6
Jan-1
7
Ma
r-17
Annual Average EUR/USD
9
• Arçelik has become the main sponsor of Turkish National Football Team.
• Eskisehir Refrigerator Plant received «TPM World Clas Award» by the
Japan Institute of Plant Maintenance, the highest award in this area.
• Grundig has been named CES (Consumer Electronics Show) 2017
Innovation Awards Honoree for VUX (Virtual User eXperience).
2017 Q1 Other Developments
10
Sales Performance
11
1,456
1,959
2,071
2,675
3,527
4,634
2016 Q1 2017 Q1
Turkey International
41%
33%
11%
6%
3%5%
42%
28%
11%
6%
3%
9%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Other
+31%
+35%
+29%
Sales by Region
2016 Q1
2017 Q1
12
Sales Bridge
2017 Q1 Organic Currency Effect Acquisition TOTAL
Domestic Growth 34.5% 0.0% 0.0% 34.5%
International Growth -5.4% 23.6% 11.0% 29.2%
Total Growth 11.1% 13.9% 6.4% 31.4%
1,456
4,294
1,959
2,071
2,675
503-113
489227
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2016 Q1 TR - Organic INT - Organic INT - FX Impact Acquisition 2017 Q1
Turkey International Impact on Rev
TL mn
13
Financial Performance
14
* EBIT w as calculated by deducting the impact of foreign exchange gains and losses arising from trade receivables and payables, credit f inance income and
charges and cash discount expense and adding income and expenses from sale of property plant and equipment.
** Net income before minority
Income Statement
TL mn 2017 Q1 2016 Q1 2016 Q4
Δ%
YoY
Δ%
QoQ 2016 2015
Δ%
YoY
Revenue 4,634 3,527 4,526 31 2 16,096 14,166 14
Gross Profit 1,478 1,194 1,432 24 3 5,340 4,536 18
margin 31.9 33.9 31.6 33.2 32.0
EBIT * 354 323 301 9 17 1,331 1,157 15
margin 7.6 9.2 6.7 8.3 8.2
Profit Before Tax 237 154 108 53 118 1,202 785 53
margin 5.1 4.4 2.4 7.5 5.5
Net Income** 241 157 230 54 5 1,304 893 46
margin 5.2 4.4 5.1 8.1 6.3
EBITDA* 485 421 423 15 15 1,769 1,527 16
margin 10.5 11.9 9.3 11.0 10.8
15
Revenue and Gross Profit by Segment
16
3,527
4,526 4,634
33.9
31.631.9
25.0
26.0
27.0
28.0
29.0
30.0
31.0
32.0
33.0
34.0
35.0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2016 Q1 2016 Q4 2017 Q1
Revenue Gross Margin (%)
2,463
3,368 3,356
36.1
32.6
34.3
25.0
27.0
29.0
31.0
33.0
35.0
37.0
39.0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2016 Q1 2016 Q4 2017 Q1
Revenue Gross Margin (%)
576
634
604
29.8
30.2
18.2
10.0
15.0
20.0
25.0
30.0
35.0
450
500
550
600
650
700
750
2016 Q1 2016 Q4 2017 Q1
Revenue Gross Margin (%)
489
525
674
27.3 27.0
32.1
20.0
22.0
24.0
26.0
28.0
30.0
32.0
34.0
450
500
550
600
650
700
750
2016 Q1 2016 Q4 2017 Q1
Revenue Gross Margin (%)
Consolidated
White Goods Consumer Electronics Other
Change
in Sales
(YoY)
(QoQ)
(31%)
(2%)
(36%)
(0%)
(5%)
(-5%)
(38%)
(29%)
Balance Sheet
TL mn 31.03.2017 31.12.2016 31.03.2017 31.12.2016
Current Assets 12,406 10,986 Current Liabilities 7,613 6,606
Cash and Cash Equivalents 2,886 2,442 ST Bank Borrowings 2,771 2,251
Trade Receivables 5,672 5,295 Trade Payables 3,156 3,086
Inventories 3,255 2,762 Provisions 425 412
Other 592 487 Other 1,261 857
Non-current Assets 6,173 5,924 Non-current Liabilities 4,915 4,299
Property, Plant and Equipment 2,801 2,750 LT Bank Borrowings 3,980 3,407
Intangible Assets 2,428 2,304 Other 935 892
Financial Investments 239 239
Other 706 630 Equity 6,052 6,005
Total Assets 18,579 16,909 Total Liabilities 18,579 16,909
31.03.2017 31.12.2016 31.12.2015 31.12.2014
Net Financial Debt/Equity 0.64 0.54 0.70 0.72
Total Liabilities/Total Assets 0.67 0.64 0.66 0.65
17
Working Capital / Sales
Working Capital
39.2% 39.1%38.7% 36.2% 37.2%
39.3%41.8%
32.5%30.9% 30.3%
30.8%29.3%
32.2%
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
18
5,295 5,672
2,762
3,255
3,086 3,156
358 376
4,7195,536
2016 - Assets 2016 - Liabilities 2017 1Q - Assets 20171Q - Liabilities
Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital
2016 2017 Q1
Change
7%
18%
2%
17%
Debt maturity profile
Debt Profile
1,317 1,174 1,741 1,267 1,621 2,168 2,491 2,467 2,722 2,442 2,886
-839-1,629 -2,144 -1,673 -1,803 -2,185 -2,508 -2,078 -2,370 -2,251 -2,770
-1,218-1,528
-1,859 -2,581-2,965
-3,269 -3,084-3,078 -2,843 -3,407
-3,980
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
2010 2011 2012 2013 2014 2015 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1
Cash and cash equivalent Short term debt Long term debt
TL mn
740
1,9832,263
2,9883,146
3,2863,100
2,6892,491
3,216
3,864
0.9
2.3 2.2
2.6
2.32.2
1.8
1.51.4
1.8
2.1
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2010 2011 2012 2013 2014 2015 16Q1 16Q2 16Q3 16Q4 17Q1
Net Debt (TL mn) Net Debt/EBITDA
Debt profile (as of Mar 31 2017)
Effective mn Original TL mn
Interest Rate p.a. (%) Currency Equivalent
TRY 11.8% 2,468 2,468
EUR 1.5% 145 566
ZAR 9.9% 750 212
CNY 4.4% 95 50
GBP 0.9% 4 20
USD 2.0% 0 1
PKR 6.3% 5,522 191
Total Bank Borrowings 3,507
USD 5.1% 510 1,856
EUR 4.0% 355 1,387
Total Eurobond 3,243
Total 6,750
19
201730%
201818%
2019-205%
202120%
202327%
Cash Flow
2016
Q1
2017
Q1
Beginning
Balance
2.166
Net
Operational
CF
351
130
18
13 2
Change in
Bank
Borrowings
Differences
due to FX
Conversion
143Dividends
Received
Fixed
Asset Sales
CAPEX 47
Other
Financial &
Investing
Activities
Ending
Balance
2.166
+324
2.490
Beginning
Balance
2.442Net
Operational
CF
410
934
102
131
Change in
Bank
Borrowings
Differences
due to FX
Conversion
129Dividends
ReceivedCAPEX
66
Other
Financial &
Investing
Activities
Ending
Balance
2.442
+444
2.886Fixed
Asset Sales
Changein Cash
Changein Cash
20
2017 Expectations
21
Market Share
White goods market volume growth
Revenue Growth
EBITDA Margin (2017)**
Long-TermEBITDA margin**
Stable or higher market share in key regions
Turkey* : c.5% (previous c.3%)
International : c.2%
>20% in TRY
c.11%
c.11%
*6 main products, in compliance with WGMA data.
**EBITDA margin calculations are inline with the methodology used in calculation of historical values
2017 Expectations
22
Polat Şen
CFO
Tel: (+90 212) 314 34 34
www.arcelikas.com
Contacts for Investor Relations
Hande Sarıdal
Finance Director
Tel: (+90 212) 314 31 85
Orkun İnanbil
Investor Relations Manager
Tel: (+90 212) 314 31 14
23
This presentation contains information and analysis on financial statements as well as forward-looking
statements that reflect the Company management’s current views with respect to certain future events.
Although it is believed that the information and analysis are correct and expectations reflected in these
statements are reasonable, they may be affected by a variety of variables and changes in underlying
assumptions that could cause actual results to differ materially.
Neither Arçelik nor any of its managers or employees nor any other person shall have any liability
whatsoever for any loss arising from the use of this presentation.
Disclaimer
24
